Disney squeezes more cash out of annual passes

Two years after Walt Disney World rolled out monthly payment plans designed to make its annual passes more affordable to a wider pool of consumers, the giant resort is now aggressively raising the prices of those same passes.

Take Disney World's premium annual pass, the resort's most expensive, which offers unlimited admission to all of its theme parks, water parks and other venues. Disney this month lifted the price of those passes from $649 to $699, an increase of 7.7 percent. With sales tax the cost totals $744.44.

Seasonal passes for Florida residents, which impose blackout dates but are one of Disney World's cheapest annual-pass options, jumped from $269 to $299 — up 11.2 percent.

At the same time, Disney also decided to stop offering lower pass prices for children ages 3 to 9. That eliminated a discount that had saved parents as much as $50 a pass.

Taken together, it's the largest round of annual-pass price hikes at Disney World in more than a decade, according to historical data compiled by AllEars.net, an independent Disney consumer website.

Even steeper increases could be on the horizon. Disney recently raised the price of annual passes to Disneyland in Anaheim, Calif., by even greater margins than it did at Disney World — 20 percent to 35 percent, depending on the type of pass — as it tries to capitalize on the impending opening of a 12-acre "Cars Land" in its Disney California Adventure Park.

Walt Disney Co.Chief Financial Officer Jay Rasulo — who called the Disneyland price hikes "quite substantial" — suggested that the company intends to follow the same model in Orlando as it opens more of its Fantasyland expansion in the Magic Kingdom during the next two years.

"I think you'll see a similar thing in Florida as we open the new product," Rasulo told Wall Street stock analysts during a conference in New York late last month.

Disney's approach contrasts sharply with that of Universal Orlando. The smaller resort, like Disney, also raised most of its ticket prices recently — but it left its annual passes untouched. Universal's pass prices range from $165 to $400.

Annual passes for SeaWorld Orlando and other Florida parks owned by SeaWorld Parks & Entertainment range from about $120 to $300. SeaWorld last raised those prices in November.

Disney would not discuss its reasons for raising annual-pass prices so sharply other than to say its pricing decisions are "based on a variety of factors."

But industry followers say they think the resort is trying to maximize the pricing power it has gained in the two years since it began allowing customers to pay for annual passes using monthly installment plans. Disney was the last of Orlando's three big theme-park operators to offer monthly plans, which help downplay the overall price of long-term passes.

Disney does not publicly disclose annual-pass sales figures. But resort executives have said in internal town-hall meetings with employees that sales of seasonal annual passes for Florida residents jumped about 20 percent after the monthly installment plans were introduced.

"These increases show that Disney's actually taking advantage of that plan — and the fact that it allows pass holders to afford a more expensive pass," said Robert Niles, publisher of ThemeParkInsider.com, an industry news site.

Disney also has several major additions coming in its U.S. theme parks, which give it leverage with consumers when raising prices. Company executives have said the ability to "price behind" big-ticket capital projects, such as the billion-dollar makeover of California Adventure or the $425 million Fantasyland expansion, is an important part of the financial rationale for launching such projects in the first place.

Some experts say Disney may be searching for the top of the price curve on its annual passes — the point at which the cost becomes so high that it deters sales — so it can rein in the number of pass holders in its parks, who, after all, don't spend as much money per visit as other tourists do. That's a real issue at Disneyland, which, because of its larger local-population base in Southern California, has far more annual-pass holders than Disney World does and is expecting a huge influx of out-of-market visitors with the opening of Cars Land.

Others, however, don't think the price increases will have much of an effect — at least not on sales of the passes themselves.

"Tickets are just one expense in a theme-park vacation — you've got hotels, food and the cost of getting to and around Orlando as well," Niles said. "Disney can get away with higher prices so long as budget-conscious visitors can find ways to save that difference by substituting cheaper hotels, food and transportation."

"Sometimes it's Disney that helps visitors do that by offering its own hotel and dining deals," he added. "But other times, it's other Orlando-area businesses that suffer when people spend less with them, in order to save money for Disney's price increases."